What is Double Spending? How does it happen?

An attempt to transfer the same digital asset or token multiple times at the same time is called double-spending or double-spending. Double spending is a rare but potential threat in blockchain networks.

Blockchain networks protect against the possibility of double spending by validating every transaction added to the distributed ledger. In networks that use the Proof of Work (PoW) consensus algorithm, such as Bitcoin, transactions are added to the chain with the confirmation given by the miners. At the time of confirmation, each Bitcoin transaction is signed with a unique “hash code” and is included in the transfers within the block.

If the same operation is tried to be performed once more, the authenticating computers called node (node) detect that the transaction is fake.

Ek bilgi: What is a Bitcoin Node? How does it work?

If adequate measures are not taken against the possibility of double spending, the reputation of the relevant protocol is damaged. Because if it is not known whether digital assets are spent at more than one point, the value of the asset is also affected by this negativity.

How to spend double on the Bitcoin network?

Under normal circumstances, double spending in the Bitcoin network is an almost impossible transaction. Because every transfer transaction on the blockchain passes the approval of six validators, and once the chain is added, there is no return.

A malicious user must pretend that a transaction has not happened before and must return the chain data to use the same asset once again. However, this process requires hash power on an astronomical scale.

What is Race Attack?

There is a possibility of creating a contradictory transaction by sending the same asset to different users at the same time, in order to create double expenditure in transactions that take place on the blockchain network. This is called “Race Attack”.

For example, in a trade transaction, if the person who receives the payment with crypto money realizes the sale of the product without waiting for the approval process, he runs the risk of double spending. There is a possibility that a transaction that has not yet received enough approvals and therefore has not been permanently added to the chain may be rejected or reversed. In this case, the transfer process will not take place at all and the user can spend the crypto money once again.

You may be interested in: What is a Bitcoin Hash Rate? Why is it Important for Bitcoin Mining?

Double spend with 51% Attack

The capture of more than half of the public blockchain network by a single person or group and manipulation of transactions is called a 51% attack or Attack 51%. To give an example from the Bitcoin (BTC) network, theoretically, the person who holds the majority of the network’s hash rate has transaction approval power and can spend double.

Still, we see that a 51% attack on the Bitcoin network is theoretically possible, but far from the truth in practice. The size of the Bitcoin blockchain network and the astronomical amount of processing power required make this attack too difficult.

For detailed information: Can a 51% attack on the bitcoin network?

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